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The AICPA accounting standards executive committee issues SOP 01-6, Accounting by Certain Entities (Including Entities With Trade Receivables) That Lend to or Finance the Activities of Others, effective for financial statements issued for the fiscal year beginning after December 15, 2001. The SOP applies to any entity, including insurance companies, corporate credit unions, mortgage companies and financial institutions, that makes loans or provides financing. This may consist of making secured mortgage loans or unsecured commercial loans or extending credit to trade customers, producing trade receivables. Copies of the SOP (product no. 014933JA) can be ordered from the AICPA order department at 888-777-7077.

FASB authorized three new projects in January. The first will focus on resolving inconsistencies in existing conceptual guidance for revenue and liability recognition. (A related proposal is available on the FASB Web site (www.fasb.org/proposals/proposalrecognition.html). Comments on it are due by March 29. Another project will set standards for improving disclosure about intangible assets not currently reported in financial statements. And, in response to its constituents’ concerns about the quantity, complexity and unwieldiness of U.S. accounting literature, FASB begins a series of administrative projects to codify and simplify guidance from its emerging issues task force, the AICPA and the SEC. (www.fasb.org/news/nr011402.html)

The auditing standards board issues Statement on Auditing Standards no. 95, Generally Accepted Auditing Standards, superseding the section by that name in SAS no. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, AU section 150). To purchase a copy of the SAS (product no. 060697JA), call 888-777-7077.

The Office of the Comptroller of the Currency releases interim guidance to financial institutions on complying with two anti-money-laundering provisions of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001 (www.occ.treas.gov/fr/fedregister/66fr59342.pdf). As of December 25, 2001, this legislation requires financial institutions to prevent foreign “shell” banks—those not physically present in any country—from obtaining banking services through correspondent accounts. The guidance includes a sample certification banks can use to keep records the act requires on the owners of any foreign banks for whom they maintain such accounts. (www.occ.treas.gov/ftp/bulletin/2002-1.doc)

The Treasury Department offers $8 million in funding, under its “First Accounts” program, to encourage insured financial institutions to make banking services more widely available to low- and moderate-income individuals. Applications, which are available at www.treas.gov/firstaccounts/application.html, must be postmarked no later than March 20. (www.treas.gov/press/releases/po891.htm)

The AICPA and the Big Five issue a document (http://ftp.aicpa.org/public/download/news/risk_factor.doc) that assesses current economic and business conditions that could hinder complete and accurate financial reporting. It offers financial statement preparers, auditors and audit committees advice on how to make their financial reports more useful to investors.

SEC Chairman Harvey L. Pitt says the commission’s division of corporation finance will monitor the annual reports Fortune 500 companies submit to the SEC in 2002. This scrutiny, Pitt says, will focus on disclosed information that seems essential to clear understanding of a company’s financial returns and outlook, but that also appears to conflict with GAAP or to be unclear or incomplete. (www.sec.gov/news/digest/12-21.txt)

The SEC amends its rules under the Securities Exchange Act of 1934 to require that, beginning in the second quarter of 2002, companies disclose in their annual reports more information about their employee stock option plans and other equity compensation agreements. (www.sec.gov/news/headlines/comm121901mtg.htm)

At its December board meeting, FASB decided (http://accounting.rutgers.edu/raw/fasb/derivatives/bdmtg121901.html) not to make final the tentative guidance in Implementation Issue no. C13, When a Loan Commitment Is Included in the Scope of Statement no. 133. Instead, the board adopted an alternative approach requiring evaluation of loan commitments under that statement’s characteristic-based definition of a derivative.

According to Fitch IBCA, Duff & Phelps, a rating service, life insurers face an estimated $3 billion to $5 billion in losses related to the September 11 terrorist attacks. But, Fitch says, the industry has $3.1 trillion in assets, it already pays—on average—$52 billion in claims annually, and it has benefited from recent increases in sales and the recovering value of its equity portfolio. (www.fitchratings.com/corporate/reports/report.cfm?rpt_id=135602)

The International Accounting Standards Board issues six interpretations of international accounting standards. The new guidance applies to evaluating the substance of leasing transactions, business combinations, disclosure of service concession arrangements, currency reporting, barter transactions revenue and the consolidation and equity method of accounting for ownership interests. (www.iasb.org.uk/cmt/0001.asp?s=319297&sc={D06C3078-9A3D-47C9-A481-DF2FA450F624}&n=63)

A new group of 70 corporations and trade associations urges the IASB not to resurrect what many in corporate America had hoped was a resolved issue—accounting for stock options granted to employees. On December 13, the International Employee Stock Option Coalition (IESOC) wrote to the IASB, protesting its development of global guidance in this area. Thus far, the board has proposed requiring companies to expense such grants.

Instead, the IESOC’s letter said, the IASB should adopt the approach set forth in FASB Statement no. 123, Accounting for Stock-Based Compensation. Under the FASB standard, if companies prefer not to expense such forms of employee compensation, they can use either fair-value or intrinsic-value methods to account for and make disclosures about them in footnotes to their financial statements. (www.fei.org/gr/download/IESOCCommentLetter.doc; www.iasb.org.uk/docs/g4sp00/g4sp00.pdf; www.fasb.org/st/summary/stsum123.htm)

The European Federation of Accountants (FEE) releases a discussion paper on harmonization, Proposal on International Standards on Auditing in the European Union (www.fee.be/secretariat/Press%20Release%20Pages/PR16.htm). In it, the FEE suggests ways to integrate and reconcile auditing standards and, in the process, to facilitate adoption of international accounting standards and integration of European capital markets. Comments are due by March 8.

At the request of the International Federation of Accountants, the seven largest accounting firms issue the GAAP 2001 Report (www.ifad.net/content/ie/ie_f_gaap_frameset.htm), which compares 62 countries’ national accounting standards with international financial reporting standards (IFRSs), formerly known as international accounting standards (IASs). The two sets of standards differ significantly in their approach to related-party disclosures—an important factor in investment and corporate governance. The report indicates that while one-third of the countries surveyed are harmonizing their standards with IFRSs, half as yet have made no progress. (www.ifac.org/News/LastestReleases.tmpl?NID=100860262517966)

The President’s Commission to Strengthen Social Security calls for the establishment of “voluntary personal accounts” in which workers would own their contributions and be able to pass them on to heirs. The group has developed three model accounts and says any of them would bolster Social Security’s financial stability and increase benefits to participants. (www.commtostrengthensocsec.gov/reports/Final_report.pdf)

The IRS is offering to waive certain penalties if taxpayers that participated in illegal tax shelters disclose them and identify their promoters. The amnesty does not apply to taxpayers involved in fraud, crime, concealment of foreign financial accounts or reporting of personal expenses as deductible business expenses. (http://ftp.fedworld.gov/pub/irs-news/ir01-121.pdf)

In an annual report to Congress, National Taxpayer Advocate Nina Olson recommends that legislators uniformly define the term “qualifying child” for tax purposes. Olson’s report also proposes reducing the alternative minimum tax’s effect on individuals. As in prior years, the report found the most serious problem taxpayers face is inadequate toll-free telephone access to IRS customer service. (http://ftp.fedworld.gov/pub/irs-news/ir-02-02.pdf)

The AICPA publishes a document, Accounting and Auditing for Related Parties and Related Party Transactions, which it describes as a free “tool kit.” It gives CPAs an overview of selected authoritative literature, SEC requirements, best-practice guidance and illustrative checklists. (http://ftp.aicpa.org/public/download/news/relpty_toolkit.doc)

GASB issues an implementation guide to Statement no. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments (product code: GQA34B). Interested parties can order it through the GASB Web site. (http://stores.yahoo.com/gasbpubs/publications-implementation-guides.html)

The Institute’s accounting standards staff releases technical practice aids (TPAs) to help private (non-SEC-registered) investment companies implement certain provisions of the AICPA audit and accounting guide, Audits of Investment Companies, especially those relating to disclosure of financial statement highlights. The next update of the AICPA publication Technical Practice Aids will contain the TPAs, which will be available from the AICPA at 888-777-7077. (www.aicpa.org/members/div/acctstd/general/private.htm)

As part of the computerization of the CPA examination, the AICPA is recruiting volunteers willing to help revise the examination’s content and assessment of skills. To qualify, interested CPAs must either supervise or be familiar with the skills required of entry-level CPAs. More information is available by phone at 609-671-2911 or by e-mail at rdevore@aicpa.org.

The American Accounting Association’s public interest section presented its Exemplar Award to Eli Mason, CPA, for his contributions to professionalism and the ethical practice of accounting. (http://accounting.rutgers.edu/raw/aaa/pi/newsletr/fall01/item03.htm)